Preferred stock market weak; Solar Capital issues $25-par notes; Fannie, Freddie falter

By Stephanie N. Rotondo

Phoenix, Nov. 8 - The preferred stock market continued to see light dealings, a trader said at midday on Thursday.

"Everything is soft, but there's really not a lot going on," he said. "The secondary is even quieter than it was yesterday."

In the primary, Solar Capital Ltd. announced its intent to sell at least $75 million of $25-par notes due 2042.

Price talk was around 6.75%, a trader said, and the deal came at that price, with $100 million of notes being issued.

However, some in the market were not all that excited about the new issue.

In the secondary, Fannie Mae and Freddie Mac preferreds were dropping considerably, despite Fannie reporting a $1.8 billion profit for its most recent quarter.

Freddie reported a $2.9 billion profit earlier in the week.

Solar's new deal fizzles

Solar Capital brought $100 million of 6.75% $25-par senior notes due 2042 on Thursday.

The deal was upsized from an expected $75 million and came in line with price talk.

But not everyone was ecstatic about the deal.

"Nobody was allowed in, there's no selling group, no syndicate," a trader remarked.

He noted that the company had done a private placement in May of a 5.875% seven-year secured bond.

"An unsecured 30-year senior note for this tiny little company at 6.75% didn't look incredibly attractive to me," he said. "I don't think a lot of people will be playing in it."

The trader further said that he was not sure if the size of the deal would grow, adding that the company was "putting it all away to retail."

He saw a less 35 cent bid for paper early in the session and a less 5 cent offer closer to midafternoon.

Joint bookrunners are Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

Proceeds will be used to pay down debt and for general corporate purposes.

City National frees up

City National Corp.'s new $175 million issue of 5.5% series C noncumulative perpetual preferreds - a deal that priced late Monday - finally freed to trade, according to a trader.

Paper was seen at $24.55, though the trader said he thought it had traded below that mark early on in the day.

Everbank Financial Corp.'s $150 million of 6.75% series A noncumulative perpetual preferreds - another deal that came Monday - was at $24.60.

And, Sun Communities Inc.'s $75 million of 7.125% series A cumulative redeemable perpetual preferreds were pegged at $24.85 bid, $24.90 offered.

That deal came Tuesday.

Fannie, Freddie fall

Fannie and Freddie preferreds were struggling in Thursday trading, even as Fannie posted a $1.8 billion profit for the third quarter.

Fannie's (OTCBB: FNMAS) dropped 14 cents, or 8.05%, to $1.60, while its (OTCBB) FNMAT fell 8 cents, or 4%, to $1.92.

Freddie's (OTCBB: FMCKJ) lost a nickel, or 2.87%, to close at $1.69.

In the third quarter of 2011, Fannie had reported a loss of $5.1 billion. For the third straight quarter of 2012, Fannie has been able to pay dividends back to the Department of Treasury, without tapping government funds.

Apollo admitted to NYSE

Apollo Investment Corp.'s $150 million of 6.625% $25-par senior notes due 2042 listed on the New York Stock Exchange on Thursday.

The symbol is "AIB." That deal priced Oct. 1.

The paper was trading at $24.45 as of the market's close, down from opening levels around par.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.